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Zellers employees walk away empty-handed in $1.825-billion deal

HBC got $1.825-billion when it sold the leases to 220 Zellers stores. Zellers employees got severance.

Angela Rankin was laid off from Zellers after 13 years. At age 50 she's wondering what's next for her.
(COLIN MCCONNELL TORONTO STAR) (Colin McConnell / Toronto Star) | Order this photo

By Francine KopunBusiness Reporter

Mon., Aug. 20, 2012

Angela Rankin knows exactly how much Target paid Zellers for the leases to 220 stores across Canada.

It wasn’t a billion. It was $1.8-billion -- $1.825-billion to be more precise.

Rankin was let go on July 28 from the Zellers at Dufferin and Dupont in Toronto after 13 years working the cash, the sales floor and as a pharmacy technician, with nothing more than the legally mandated severance pay her employers were required to give.

“It’s selfishness. It’s sad,” says Rankin, 50, a mother of one who helps support cousins in Jamaica.

Rankin will speak at a demonstration led by the United Food and Commercial Workers Union on Wednesday, Aug. 22, at 11 a.m., in front of Target’s Canadian headquarters in Mississauga.

“Target needs to do the right thing – keep the workers and respect their wages and benefits,” says Kevin Shimmin, national representative of the UFCW Canada,

Target posted earnings Wednesday of $704 million (U.S.), or $1.06 per share, in the period ended July 30. Overall revenue rose 3.5 per cent to $16.45 million in the quarter. Revenue at stores opened at least a year rose 3.1 per cent.

The chain will open its first stores in Canada in 2013.

On the day she spoke to the Star, Rankin was hauling home a fat, round container, almost as tall as she is, for which she paid $70, to send her family in Jamaica dried cod, rice, cooking oil and toothpaste.

Some of what Rankin is sending was purchased at Zellers: A Sunbeam MixMaster, bearing a red wrap with Zellers stamped on it, sits on the floor of her tiny apartment, waiting to be packed.

Rankin worked 28 hours a week at Zellers and when she left she was earning $11.97 an hour. She kept a second job to make ends meet. She worked in security for eight years. She works part-time for the UFCW.

Now, at 50, she’s wondering what’s next. Should she apply for another retail job? Should she go back to school? She knows she loves helping people any way she can.

“It doesn’t have to be this way,” says Kendra Coulter, a professor at the Centre for Labour Studies at Brock University. “This is a decision that has been made at the corporate level by Target and Zellers and HBC.”

She blames Stephen Harper’s Conservative government for failing to protect workers.

“If a very profitable foreign company is going to come into our country to rebrand stores, our citizens deserve respect and some criteria have to be met. They’re not building infrastructure from scratch, they’re not creating an enterprise that didn’t exist, they are rebranding stores,” said Coulter.

Walmart did it differently in 1994. When the Arkansas-based chain bought the ailing Woolco stores, it took on all 16,000 employees in 122 locations.

“Even though Woolco had seen better days and was struggling, there was still an enormous amount of talent in that company,” said Andrew Pelletier, vice-president of corporate affairs and sustainability at Walmart Canada.

Mario Pilozzi, a senior vice-president at Woolco at the time of the takeover, went on to become CEO of Walmart Canada.

Woolco sales associates were given extensive retraining. They were given a five per cent raise.

“I think that is one of the reasons Walmart has succeeded in Canada, is because we started with a fantastic team that we re-motivated,” said Pelletier.

Walmart now has more than 300 locations in Canada.

Interestingly, Walmart did not apply the same approach this time around when it picked up 39 former Zellers stores from Target.

“We didn't automatically hire all of the Zellers employees as we needed to determine the staffing needs for each of these additional stores first, which vary in size and layout. We also needed to determine what merchandise would be carried in each store (food, etc) which varies by store and which affects staffing requirements.

However, we have been reaching out to the Zellers employees all year and have already hired hundreds of the Zellers employees to work in these stores, including pharmacy associates. Since our hiring for these stores is still underway, we expect the number of Zellers hires will continue to grow,” said Pelletier.

Of the 220 Zellers leaseholds originally purchased in 2011, Target kept 189. It transferred 45 of the 189 to other retailers, including 39 to Walmart. In July, HBC announced that it would be closing its remaining 85 stores.

There were 273 Zellers locations in Canada before the deals were made, each location employing between 100 and 150 people. About 15 Zellers stores were unionized.

That means at least 27,300 people across Canada lost their jobs as a result of the transactions.

“The simple fact is that Target did not buy the Zellers business and as such there was no transfer of merchandise, systems or employees,” Target Canada spokesperson Lisa Gibson said.

“Target wants to deliver the best guest service possible. To accomplish that goal, we need the flexibility to interview all interested candidates so we can select the best, guest-service focused team members.

“Target has already hired a number of former Zellers/HBC employees and is guaranteeing an interview to all Zellers employees who apply for a position for the 2013 store opening cycle.”

Elizabeth Foley, 47, worked at Zellers for 14 years, down to the last days.

“They sold everything that wasn’t nailed down and I helped them,” says Foley, a single mother of two teenagers.

This week, Foley received notice that the owners of the house she rents in Windsor want her to leave so they can occupy it themselves.

Her hope is that she will qualify for job retraining under an employment insurance program so she can work in a payroll department somewhere.

Representatives for HBC declined to discuss how the Zellers employees were dealt with.

“Zellers Associates are receiving a greater amount of notice (or pay in lieu) than the provincial employment standards legislation. Zellers is also providing the affected Associates with career training and transition support services to assist them in finding employment opportunities. Zellers is committed to treating our Associates fairly throughout this transition,” HBC spokesperson Tiffany Bourré wrote in response to questions from the Star.

Foley says the only career training and transition support she got from HBC was access to a website focused on how to write a resumé.

“That was their retraining program,” she said.

Foley and Rankin said Zellers employees with 20 years of service and more received an extra 20 per cent in severance and those with 25 years or more received an extra 25 per cent.

Mike Moffat, an assistant professor at the Richard Ivey School of Business, says HBC could have negotiated a better deal for Zellers employees.

“Target’s argument is logically sound. It is, from a legal point of view, absolutely correct. Do they have some additional ethical obligations? I think that there was an opportunity here for Target to go above and beyond their legal responsibility.”

Moffat says corporations act in this fashion because they can.

“At the end of the day most of us do our shopping based on price and convenience. We don’t take the time to think: How does this particular retailer treat employees compared to another retailer? Corporations know that, which gives then a great deal of flexibility to make these moves.”

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